The European Commission, the EU's executive, outlined new targets earlier this year but has yet to follow up with a firm legislative proposal. That is expected around the end of the year.

Speaking on condition of anonymity, one source said the Commission was considering two legal targets to follow the three green energy goals that expire at the end of this decade.

They would be a 40 percent carbon-reduction goal and a 30 percent renewable energy use target. That compares with the 2020 targets of a 20 percent carbon cut from 1990 levels, a 20 percent share of renewable energy and a target to improve energy savings to 20 percent.

"The Commission at the moment is looking at a 40 percent domestic greenhouse gas target and a 30 percent EU-wide renewables target, but no third target," the source said, adding some commissioners opposed the goals and debate would be difficult.

In addition to cutting domestic emissions by 40 percent, another source said the EU could commit to further cuts through international offsets if a global climate change deal is agreed.

The source added Commission experts were analyzing the economic impact of a 35-45 percent range for carbon cutting.

Traditionally, EU climate policy has been the preserve of the Commission's climate and energy departments. But Europe's economic struggles have prompted influential officials, including EU Economic and Monetary Affairs chief Olli Rehn, to insist green policy must not undo fragile recovery.

IMPACT

The European Union's goals can influence the international debate on climate change and also have a bearing on the European Union's Emissions Trading Scheme (ETS), which fell to record lows earlier this year under the burden of surplus permits.

Tougher policy goals could help to limit the oversupply of carbon allowances.

If agreed, the new European goals would be more ambitious than other nations have managed.

The U.S. Senate has refused to legislate cuts favored by U.S. President Barack Obama and Australia's new conservative Prime Minister Tony Abbott, who won power last month, has promised to scrap taxes on carbon pollution.

"The greenhouse gas numbers that the Commission is currently going for gives us only a 50:50 chance of preventing run-away climate change," said Brook Riley, climate and energy campaigner at Friends of the Earth (FoE).

He said the range used to model the economic impact was far too low and the Commission was putting short-term political pragmatism before science.

The Commission does not comment on proposals before they are published.

Speaking in Vilnius, where EU energy ministers are meeting on Thursday and Friday, Energy Commissioner Guenther Oettinger said only the debate was open.

"It's up to member states to bring some input, to bring some constructive priorities," he told reporters.

Member states appear deeply divided. Denmark has advocated a new set of three targets, but others, including Britain, have said they want just one carbon-cutting goal.

EU member Poland, which will host the next U.N. talks on climate change in Warsaw this year, says the European Union should not make any promises until there is a global deal, which is not expected until a U.N. summit in Paris in 2015.

Even U.N. officials have voiced concern that nations will not promise sufficient carbon cuts.

Echoing disagreement at the government level, the business community is also divided on the need for binding EU targets.

An open letter to EU energy ministers and commissioners, signed by 61 companies and associations, including energy firms Alstom and Acciona, called for a binding 2030 renewable goal, but did not specify a level.

(Additional reporting by Alister Doyle in Oslo, Andrius Sytas in Vilnius and Nina Chestney in London; editing by Jason Neely)

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